Astro Teller, head of Alphabet’s “Moon Factory”
The centerpiece of this strategy is a dedicated venture capital fund that invests solely in companies that have spun out of Division X and in which Alphabet holds only a minority stake. Taylor explained on stage: "If Alphabet is the only limited partner (LP) of this fund, then this fund still belongs to the Alphabet system; even if it invests in projects in the
The fund, called Series X Capital, has raised more than $500 million and is managed by Gideon Yu, a former YouTube executive and former Facebook CFO. Bloomberg first disclosed the fund’s existence last year. Unlike Alphabet’s other investment arms—GV invests broadly in early-stage startups, CapitalG focuses on growth-stage companies, and Gradient Ventures focuses on artificial intelligence startups—Series
This model marks a significant development for the X division. In the past, the X department would upgrade successful projects such as Waymo (autonomous driving) and Wing (drone delivery) into independent subsidiaries of Alphabet. Taylor said that over the past decade, the lab has come to realize that some of its moonshot projects could benefit from Alphabet's resources and scale, but that other projects "could be faster-paced and don't necessarily benefit from the status of being part of Alphabet because they are too different from Alphabet's core business."
“It makes sense to have these projects outside of Alphabet but stay closely connected — to realize a lot of strategic synergies without having to control them,” he said.
Taylor explained at the Disrupt conference that the key to the effectiveness of the spin-off strategy lies in Department X’s ultimate pursuit of “rational candor,” including a culture that “actively ‘cuts losses’ on promising ideas and celebrates them.”
In the definition of the X department, the "moonshot plan" needs to meet three specific conditions: it must be dedicated to solving major problems on a global scale; it must propose a product or service that can completely solve the problem; it must rely on breakthrough technology to allow the X department team to see a "gleam of hope" in solving the problem. Crucially, Taylor stresses, “if someone proposes a ‘moonshot’ that sounds ‘reasonable,’ companies are not interested — because by definition, it’s not a moonshot at all.”
So what happens to ideas that meet these criteria? Taylor said that Department X will conduct rigorous testing and proactively look for reasons to “stop losses.” “If someone comes up with an idea that sounds crazy and meets all three of the above criteria, and it’s a testable hypothesis, then we only need to invest a small amount of money to know whether it’s crazier or less crazy than we thought,” he explains. “If it turns out to be ‘crazier,’ that’s okay — give it a high-five and then ‘kick it off’ and move on to other projects.”
This model requires team members to “untie” themselves from the ideas they come up with. Because of this, Taylor said he doesn’t even know who is behind most of Division X’s projects — including self-driving company Waymo and drone company Wing, which currently delivers packages to Walmart in about six U.S. cities. He told the Disrupt audience: “If we’re going to explore a certain direction and you as the lead inventor feel, ‘This is my brainchild,’ then can I expect you to be truly rational and candid?”
In practice, this means that Department X will prioritize tackling the hardest parts of the project while proactively looking for reasons to shut down the project. The end result was that the project had a “success rate of only 2%.” But Taylor doesn’t see it as a “failure” but rather as a “feature” of Department X. Division
All this testing and trial and error is expensive. The spin-off model just solves a practical problem: in the past, if Department X wanted to spin off the project from Alphabet, it had to find external venture investors willing to take over at least 51% of the equity; but now, by establishing a fund that “understands us deeply and can legally only invest in our spin-off projects” (Taylor’s words), Department X can not only systemize the spin-off process, but also maintain close strategic ties.
Despite the emphasis on “untying” the idea, employees in Department X are still deeply involved and gain tangible benefits when the project is spun off. The financial incentives for employees involved in the spin-off project are substantial. "You and the rest of your team will receive a stake in the spin-off company," Taylor said. "This is a proportion of what you would get from a garage startup at the current funding stage, but without taking on any risk in the process."
Department X will also make this “trade-off” clear when recruiting potential employees. “I agree that you’re more likely to achieve ‘well-above-normal’ returns by starting an external business,” Taylor said at Disrupt. “But if you join Department
X employees were paid in line with other Google employees and had no equity in the early stages of the project — "because it wasn't even a company at this point, just an idea we were trying to explore," Taylor explains. This setting eliminates the financial pressure of "founders unwilling to shut down their projects." He explained: "You can just say, 'This project is bringing down our overall standard, stop it.' And because you are not betting your child's college tuition on this project, you don't have any concerns."
In 2025, the X division has spun off at least two companies: Taara, which develops wireless optical communications technology, and Heritable Agriculture, a biotech company that uses machine learning to speed up crop breeding. Previous companies that have spun off and received external financing include renewable energy storage company Malta, geothermal heating company Dandelion, and artificial intelligence headset company iyO.
On the eve of Disrupt, Division X announced its latest moonshot company, Anori. The company describes itself as "a new artificial intelligence platform designed to help real estate developers, the architectural design industry and city managers sort out the complex process of new construction projects." When asked why this AI platform counts as a moonshot, Taylor pointed to the scale of the problem — and potential opportunity — behind it.
“The built environment (the spaces created by humans) produces around 25% of the world’s solid waste and around 25% of global CO2 emissions. It plays a role in Maslow’s Hierarchy of Needs – it’s where we live and where we spend most of our time. It also accounts for a large portion of global GDP. So, as an industry, it’s important.”